A Dirty Little Secret: Rising Property Values Are Incompatible With Affordability

Rising property values come with positive community development, but this shift can make neighborhoods inaccessible to low-income renters and fixed-income homeowners.

3 minute read

August 4, 2023, 5:00 AM PDT

By LM_Ortiz


View of east Baltimore, Maryland low-slung brick buildings against a lightly cloudy blue sky

Craig / Adobe Stock

It’s time for some straight talk about rising property values. Yes, they help amass equity for homeowners, provide opportunities for developers, and generate revenue for localities. But they also raise rents, pushing out low-income renters; keep the unhoused, unhoused; and push fixed-income homeowners into fiscal precariousness. If community development is about the entire human community, and not just real estate, we must grapple with this tension. Higher property values and equitable development are not an easy marriage.

Parks, new housing, calm traffic, quality schools, the presence of grocers and other businesses, increased street lighting, a sense of community safety, blight reduction, and neighborhood cohesion all push property values higher. So does almost every aspect of positive community development. Remedying the racial imbalance in wealth creation through homeownership relies, to a great extent, on this property value appreciation. But if pushing values up for existing homeowners requires pushing out low-income homeowners and renters of limited means, and creates fewer affordable housing options for unhoused people, we have a quandary.

Baltimore distinguished itself in the post-World War II period as a city of homeowners. Almost two-thirds of its residents owned in the early 1950s, before government-subsidized and racially covenanted suburbs facilitated white flight, and the dynamics of increased global competition encouraged manufacturers to exit. Only 48 percent of the city’s residents own today, in a city that is about 62 percent African American.

Since that postwar peak, the value of homes in many neighborhoods has dropped.

Neighborhoods on both the west and east sides of the city that were redlined by the U.S. Home Owners Loan Corporation in a 1937 map are now, in the city’s 2017 Housing Market Typology map, marked as areas with sales values about 80 to 90 percent below average in Baltimore.

But on the east side, real estate developers transformed warehouses, flophouses, and wharves into luxury housing, thereby pushing up the property values of adjacent neighborhoods that had previously been classified as “stressed.”

It is in those ‘stressed’ neighborhoods that SHARE Baltimore’s network of community land trusts operates, and where we see firsthand the mixed blessing of high property values.

Low property values in the stressed neighborhoods—on both the east and west sides of Baltimore—discouraged property sales by homeowners for decades, facilitated homeowner-to-rental conversion, and contributed to a vacant housing stock in Baltimore that ranges from 16,000 to 47,000, depending on who’s counting. But, as property values on the east side now rise, vacant houses in stressed neighborhoods adjacent to prime neighborhoods are now becoming attractive to market-rate minded developers. As our CLTs seek to acquire these same vacant houses to rehab into permanently affordable homes, the competition with market-rate developers has pushed up our acquisition costs.

While most would assume that homeowners in these stressed neighborhoods on the east side would welcome the competition between developers and CLTs because it ultimately pushes up their own property values and increases home equity, it is not so simple.

Please see the source article linked below to continue reading.

Friday, May 5, 2023 in Shelterforce Magazine

Aeriel view of white sheep grazing on green grass between rows of solar panels.

Coming Soon to Ohio: The Largest Agrivoltaic Farm in the US

The ambitious 6,000-acre project will combine an 800-watt solar farm with crop and livestock production.

April 24, 2024 - Columbus Dispatch

Large blank mall building with only two cars in large parking lot.

Pennsylvania Mall Conversion Bill Passes House

If passed, the bill would promote the adaptive reuse of defunct commercial buildings.

April 18, 2024 - Central Penn Business Journal

Workers putting down asphalt on road.

U.S. Supreme Court: California's Impact Fees May Violate Takings Clause

A California property owner took El Dorado County to state court after paying a traffic impact fee he felt was exorbitant. He lost in trial court, appellate court, and the California Supreme Court denied review. Then the U.S. Supreme Court acted.

April 18, 2024 - Los Angeles Times

Divvy Chicago

Divvy Introduces E-Bike Charging Docks

New, circular docks let e-bikes charge at stations, eliminating the need for frequent battery swaps.

16 minutes ago - Streetsblog Chicago

Freeway sign with "severe weather - use caution" over multilane freeway in rainy weather.

How Freeway Projects Impact Climate Resilience

In addition to displacement and public health impacts, highway expansions can also make communities less resilient to flooding and other climate-related disasters.

1 hour ago - Transportation for America

Wind turbines and solar panels against a backdrop of mountains in the Mojave Desert near Palm Springs, California

California Grid Runs on 100% Renewable Energy for Over 9 Hours

The state’s energy grid was entirely powered by clean energy for some portion of the day on 37 out of the last 45 days.

April 24 - Fast Company

News from HUD User

HUD's Office of Policy Development and Research

Call for Speakers

Mpact Transit + Community

New Updates on PD&R Edge

HUD's Office of Policy Development and Research

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.